AUD/USD: All Eyes On 0.7070

Since having been rejected at the 0.6830 level on June 18th, the Aussie had a strong comeback by gaining 3% within a three week period. However, signs of weakness started to appear, as soon as the critical 0.7020 mark has been hit.

Taking into consideration the bigger picture, AUD/USD still has to close above 0.7070 in order to confirm a shift in momentum, which would likely lead to price heading north towards 0.7200 at least.

Focusing on the short-term, the area of 0.6940-0.6925 represents a logical spot for a potential pullback coming to an end. If so, this might represent a sweet spot for a low risk entry.

With regards to the complexity of the corrective structure that has started after the flash crash in the beginning of January, price could continue to draw a choppy picture of the overall structure before starting a long-lasting bullish shift.

Having a look at the weekly and especially the monthly chart, we can clearly see that a potential double bottom might be in the making, with a rejection deep down into 0.6700ish territory. Mid-term this could drive price all the way up to the 0.8100 major resistance. A clear break and close above the 0.8150 mark, would open the door for price heading towards 0.8600-0.8700.

Verdict:

  • Mid to long-term: bullish by keeping an eye on 0.81-0.815 first
  • Short-term: bullish but due to the complexity of the overall structure, staying patient and not forcing a trade. Major areas are 0.6940-0.6925 as a potential pullback area and 0.7070 as a point of validation for a further increase in price.

AUD/USD Daily

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